With a loosening in government family planning policy and the Year of the Dragon fast approaching, China is bracing itself for baby boom.

For many Chinese families, it will be highly desirable to have their children born in 2012’s Year of the Dragon. Zhang Dekang, a Welsh hospital director in a Hong Kong obstetrics and gynecology department said that the birth rate in China will increase by 5% in 2012 compared to other years.

The baby boom is expected to boost sales in many enterprises, such as dairy enterprise Yi’Li group and paper diaper producers Heng’ An group. “The dragon baby boom will increase demand for infant milk powder, paper diapers and clothes.” Michael mark, a French Paris bank customer department analyst said.

Considering China’s aging workforce problem, the Chinese government is also now relaxing the family planning policy restrictions to allow the “one child” family a second child. In addition, in rural areas, if a couple has female child first and the child is over four years old, they also can have a second child.

As incomes rise, more and more Chinese parents are willing to spend more money on their children. Last year, the average disposable income per capita of an average urban family grew 8% to RMB19, 109. This figure has almost doubled compared with the last five years. Ou’ Rui Information Consulting Company estimates that in 2011, China’s infant food market increased a massive 22% and the estimate that this figure will double by 2015.

However, China market research group adviser James Roy points out that China and other dairy-product manufacturers still face fierce competition because Chinese consumers still believe that local brands “lack credibility”. He said “Chinese consumers who have spending power choose to buy foreign brands”. Indeed, market data shows that foreign enterprises dominate the infant food industry in China.

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